The Friends Provident International Summit Bond is a unit linked life assurance plan from Friends Provident International. It offers a limited range of investment options in the form of mirror funds that FPI has created for international investors.
Summit has been widely marketed to expatriates over many years.
The plans are sometimes known as baby bonds because they enable clients with relatively small amounts (the currency equivalent of £25,000) to invest on a tax efficient international platform.
FPI Summit Bond Key Features
Mirror funds – Friends Provident proudly states in their in their marketing literature that the bond provides access to a wide range of mirror funds.
Whilst the range does provide access to all the major asset classes, industry sectors and geographic regions, mirror funds have an extra layer of charges embedded within them and are expensive.
These additional charges cause a drag on investment returns and they will always under-perform the clean lower cost alternative as a result.
Performance statistics are updated monthly, and fund prices updated daily on the fund fact sheets, accessible via FPI’s Fund Centre in an easy to use format.
Summit Bond holders are permitted to invest in a maximum of 10 underlying funds at any one time.
Multi-currencies – can be denominated in US dollar, GB pound, Hong Kong dollar, or Euro.
Baby bond – facilitates smaller initial lump sum investments: US dollar 37,500, GB pound 25,000, Hong Kong dollar 37,500 - and Euro 37,500.
Charges – If you have been recommended the FPI Reserve Bond, your financial adviser should provide you with an illustration and personal charging structure.
This will detail all charges that are taken from your investment.
FPI in their product literature claim to keep the charges to a minimum so you can “make more of your money work for you.”
We disagree, and think the product is expensive.
Here are the charges that you can expect with Summit:
A charge of 1.6% of the premium each year will be taken for the first five years.
This is taken as 0.4% each quarter by deduction of units from the plan. Additional premiums receive their own establishment charges.
This is currently 1.2% of the value of each fund each year, debited directly to the fund on each valuation day.
Underlying investment fund charges:
The underlying fund charges vary from fund to fund, and can be as high as 3.35%, depending on mirror fund chosen.
Currently no charge is made, although FPI do reserve the right to impose a charge, upon three months’ written notice to bond holders of up to 1% of the amount involved or USD 15, GBP 10, EUR 15 or HKD 150, if greater.
Early Surrender – Summit does not have an early surrender penalty, however, if you do decide to surrender the whole of your plan, then you will have to pay all outstanding establishment charges.